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A tale of two Mercks — what the Big Pharma dispute teaches us

The 'epic' legal battle shines a light on trade mark rights and whether using one's 'one name' carries significant weight in brand name disputes, writes Michael Gardner

In 1668, a member of the Merck family in Germany, opened a pharmacy under the family name 'E Merck'. More than two hundred years later, a descendant of the same family started a new business in North America also using the 'Merck' family name.

Both businesses subsequently became hugely successful. They are now global pharma giants employing thousands of people and generating hundreds of millions of pounds in revenues worldwide. But despite having roots in the same family and sharing the use of the 'Merck' name, they are different companies. Although one operates primarily in America, rather than in Europe, in the internet era, it is not surprising that having two substantial businesses engaged in the same activity and both sharing a common name has led to brand identity issues. The parties have previously entered into agreements designed to avoid clashes and infringements of each other’s trade marks. But even these have not been enough to keep them from suing each other.

In November 2017, their epic legal battle over the use of the 'Merck' name reached England's Court of Appeal. The Court ruled that several matters will have to be sent back to the High Court to be tried again.  This one is clearly going to run and run.

Such disputes between businesses who share the same name are not uncommon in the world of trade mark law.

Besides Merck, perhaps some of the better known cases that have reached the Courts in recent times include Apple (the music company) versus Apple (the computer company), Budweiser and Budvar (which concerned beer sold by both as 'Budweiser') and Assos against Asos (clothing).

In each case, the Courts have been faced with the unenviable task of determining which of the parties concerned should be able to use the disputed name for the disputed goods – often in a situation where they have been existing side by side for a number of years.  The stakes have been high because these days 'brands' are very important. Having a good brand name can literally make or break a business.

It is also the case that for many would-be entrepreneurs, the most natural thing for them to do, at least to start with, is to use their own name when starting a business. This is especially so where the family name already carries some significance. So is there any legal protection for entrepreneurs who want to use their own name as a trading name?

The answer is that yes there is – but there are a number of caveats and qualifications to that right. It is also very important that when seeking to rely on such an 'own name' defence, the party in question acts in good faith. Each case will always turn on its own facts, however.

Victoria Beckham's first claim to fame was as the 'Posh Spice' of 1990s girl band The Spice Girls before she put away her microphone and launched a clothing range.

Suppose, that before Victoria Beckham had become famous, an unknown lady by the same name had registered a trade mark and had started a fashion business herself under the 'Victoria Beckham' brand name.  Would that earlier Mrs Beckham have been entitled to stop the later, more famous namesake from trading under her name?  Or vice versa?

The answer lies in EU trade mark law.

In the Beckham scenario described above, provided the original Mrs Beckham had registered her trade mark legitimately and started trading in good faith without any knowledge of her 'Posh' namesake,  then she would be entitled to go on doing so. Indeed, she might even be able to prevent the famous Mrs Beckham from commercialising her name for the same type of business.

The key point is that if you want to use your own name for a business and someone else has already registered that name as a trade mark, you must act fairly having regard to the interests of the trade mark owner. The more your activity is done in the knowledge of the other person's existing rights and the more confusion it may cause in the market, the less likely the Court will take a sympathetic view of the matter.

Also, whereas previously, the 'own name' defence had been available to individuals and companies, the defence is likely to be restricted to personal names only going forward.

From the point of view of those already in business and for whom their brand is important, the key to stopping others trading under the same or a similar name is to act as quickly as possible when such a scenario is discovered. The more you allow another trader to do business over a period of time using the same or a similar mark for the same or similar goods or services, the more difficult it may become to enforce your rights. This is especially so where that upstart trader is using their own name and may be able to use that as part of their defence.

Michael Gardner is partner and head of IP & Commercial at Wedlake Bell LLP